The Reliance episode raised three sets of issues. One was about how the Reliance businesses were to be run, and by whom. The second concerned ownership of the enterprise. And finally, there were the corporate governance issues that the younger Ambani raised. | |
| The first set of questions has now been answered because the inevitable has been agreed on. The Reliance group is to be split, and each brother will get his own management turf along the lines that have been more or less public for some time. |
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| This is a significant victory for Anil Ambani, who had little role in the mother ship (Reliance Industries) in recent years. While he must have his regrets about leaving the flagship company that his father founded and which has a unique place in India's corporate history, he has played his cards well to wrest control of Reliance Infocomm and Reliance Capital, while retaining Reliance Energy. |
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| The point he will now want to prove is that he can build businesses as well as his older brother can. |
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| Mukesh in turn is bound to have regrets about parting with Infocomm, which has been his brainchild and which has absorbed much of his time and attention in recent years, but he too must be happy to put the issue behind him, since he had decided some time ago that he could not work any more with Anil and would like the freedom to go his own way. |
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| Having built two giant enterprises (the refinery and Infocomm), and with the RIL cash flow in his pocket, it must be assumed that Mukesh will plan big all over again. |
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| The second issue (of ownership) has also been sorted out, while staying true to Mukesh Ambani's initial assertion seven months ago that these are in the "private domain". |
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| However, it does not seem to be the case (as Mukesh had claimed) that all issues had been settled by Dhirubhai Ambani in his lifetime, because the information trickling out is that the 30:30:40 formulation that surfaced only a few months ago has now been agreed upon, with each brother getting 30 per cent of the family's holdings in the group (with appropriate swaps to align ownership with management), and the mother Kokilaben holding 40 per cent. |
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| Once again, it is Anil Ambani who has scored the substantive point in having a fair division of assets done to the satisfaction of all primary claimants. |
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| While Mukesh has had to concede significant ground here, he should be complimented on his willingness to accept the change and to be fair in the division; indeed, he has scored a point by refusing to split Reliance Industries itself, whose control he now has to himself. |
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| On the third issue of corporate governance, the jury is still out. The revelations that have been made do little credit to the way Mukesh has been running the group; indeed, he has already had to retrace some steps (specifically by giving back the equity that he and his principal lieutenants had acquired in Infocomm). However, many questions remain unanswered. |
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| As for Anil Ambani, the issue is whether the issues that he raised on behalf of minority shareholders have been brushed under the carpet, now that he has got a fair division of the group. |
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| Meanwhile, the people who emerge with the least amount of credit are those in charge of the government's various investigative and compliance arms at Sebi, the company law department and elsewhere, all of whom did precisely nothing. |
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| Clearly, there are different standards of enforcement for different people and, when it comes to the rich and powerful, the government would like to look the other way while setting up more committees on corporate governance. |
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| Through it all, the seven-month fracas gave the general and investing public a look at some of the group's internal workings; it has not been a pretty sight. |
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